An Emergency 2.5% COLA Could Add $5,000 To Your Social Security Income Over the First Ten Years

An Emergency 2.5% COLA Could Add $5,000 To Your Social Security Income Over the First Ten Years

By Mary Johnson, editor

Use of a consumer price index (CPI) that does not reflect the costs experienced by retirees to calculate the annual cost of living adjustment (COLA) suppresses the amount of lifetime Social Security income received.  It reduces your Social Security benefit payments by thousands of dollars over the course of a retirement.

As prices increase, those who depend on Social Security benefits experience a decline in the buying power.  In fact, according to my research, Social Security benefits have lost 30% of buying power over the past 20 years.  For some retirees, that means a decline in their standard of living.

If our annual COLA works as intended, this should not happen.

Consider the difference it would have made if Congress had provided an emergency COLA of 2.5% during the four years when there was no, or almost no, COLA in 2010, 2011, 2016, and 2017.  The benefits of people retired since 2009 would be about 10% higher per month today!  For someone receiving about $1,200 in 2009 that would be an extra $120 per month.

If the Social Security Administration announces a 1.3% COLA next month, an emergency COLA of 2.5% instead would make a big difference to your income over the next ten years and would also prevent Medicare Part B premiums from spiking any higher than they are already likely to go.

A 2.5% COLA would boost an average monthly benefit of about $1,500 by an additional $5,000 over the next ten years through 2030.  An emergency 2.5% COLA would boost a monthly $1,500 benefit by an extra $37.50 ($450 per year) in 2021, but it would grow to an extra $46.30 per month by the end of ten years.  Another way to think about this, if retirees do not receive a 2.5% COLA, that would be like loosing $5,000 in Social Security income over the next ten years.

TSCL is contacting Members of Congress to make them aware of the likelihood that the COLA in 2021 could be one of the lowest ever paid, and to propose an emergency COLA of 2.5%.  We drew the 2.5% from the current estimated Social Security baseline budget produced by the Congressional Budget Office (CBO).  In January, the CBO estimated that the 2021 COLA would be 2.5%, thus providing an emergency COLA of that amount is already factored into Social Security Trust Fund calculations.

Doing nothing and allowing the Social Security recipients to go with just a 1.3% COLA, would be highly detrimental to the Social Security income of all retirees, and would not extend program solvency.  TSCL is working to make Members of Congress aware of the need for providing this boost to your Social Security benefits both to strengthen your retirement income and to protect you from huge spikes in the Medicare Part B premium.

What you can do:  Contact your Members of Congress and tell them to enact legislation that would ensure you get an emergency COLA in 2021.  Let’s tell our Members of Congress that you are asking to receive the 2.5% COLA which was already estimated in the January 2020 Social Security budget baseline by the Congressional Budget Office. You can send an email to your Congressman at